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STATE BUDGET SHORTFALLS DISPROPORTIONATELY AFFECT HIGHER EDUCATION SPENDING: New Alert Finds that Existing State Tax Structures Cannot Adequately Fund Higher Education Budgets

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"This boom-and-bust cycle has become a traditional state pattern of treating colleges and universities disproportionately well during prosperous times-and disproportionately poorly in tight budgetary circumstances,"

According to a recent policy alert, all but a handful of states will experience difficulty maintaining current spending on public services without making significant changes to their existing tax structures.

“State Shortfalls Projected Throughout the Decade,” the February 2003 policy alert by Dennis Jones of the National Center for Public Policy and Higher Education, found this revenue shortfall will force state legislatures to continue to reduce their spending on higher education, even with normal economic growth over the next eight years. “This boom-and-bust cycle has become a traditional state pattern of treating colleges and universities disproportionately well during prosperous times-and disproportionately poorly in tight budgetary circumstances,” Jones writes.

State actions during the boom of the ’90s will place enormous pressure on state budgets, and especially on higher education funding, in the future. Much like the federal government at the time, state budgeters saw surpluses well into the future and decided to not only cut taxes, but to fund popular new programs. These decisions from the ’90s, combined with the economic downturn, have resulted in huge state deficits.

The report found that most states will continue to face shortfalls and cuts in higher education funding even if something other than temporary gimmicks is used to balance the budget-especially considering the increasing burden that Medicaid places on states. “The rapidly escalating costs of Medicaid, more than anything else, explain why total state and local spending is projected to grow faster than spending for higher education in most states,” according to the report.

The complete alert is available at: http://www.highereducation.org/pa_0203/index.html

 

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